Guided by the Spirit of Fox Butterfield, the New York Times Inadvertently Confirms that Tax Competition Is Needed to Curtail Government Greed

A former reporter for the New York Times, Fox Butterfield, became a bit of a laughingstock in the 1990s for publishing a series of articles addressing the supposed quandary of how crime rates could be falling during periods when prison populations were expanding. A number of critics sarcastically explained that crimes rates were falling because bad guys were behind bars and invented the term “Butterfield Effect” to describe the failure of leftists to put 2 + 2 together.

She obviously wants readers to conclude that bad, mean, wicked Republicans are being too dogmatic because they won’t agree to big tax hikes. But the chart she prepared tells a completely different story. The only budget agreement that actually produced a balanced budget was the 1997 deal, and that deal contained tax cuts rather than tax increases!

I’m thinking this habit of accidentally helping the other side should be called the “Own-Goal Effect,” even though I generally don’t like anything associated with soccer (with one very important exception).

Given the track record of the New York Times in these matters, you won’t be surprised that the self-styled newspaper of record just published a story that combines the Butterfield Effect and the Own-Goal Effect.

Taxes on earnings, investment income, sales and a few other things have gone up already in many countries, and further increases are possible, including a huge one in the United States. …“Quite a few countries are trying to increase tax revenue,” said Kevin Cornelius, a partner in Geneva for the Human Capital Practice at Ernst & Young. “The question is who’s raising taxes the slowest. I can’t remember as much tax legislation going through as we’ve seen in the last 24 months.”

But notice the headline that the NYT assigned to the article. Channeling the wisdom of Fox Butterfield, it fails to make an obvious causal link. As I have repeatedly noted in my writings about tax competition and tax havens, taxpayers need places to hide their money in order to curtail the ability and incentive of politicians to impose higher tax rates.

In other words, the headline actually should read: “Taxes Trend Higher Worldwide Because there are Few Places to Hide.”

The article includes some discussion of how politicians are trying to shut down escape routes.

A rise in rates is not the only unpleasant matter that taxpayers must contend with. Tax lawyers, accountants and bankers highlight a global game of gotcha being played by revenue authorities. Taxpayers are being asked to provide more detailed information about financial accounts. Americans living or doing business abroad are conspicuous targets in this effort, and on the off chance that they will be less than forthcoming, the Internal Revenue Service is asking foreign financial institutions and tax agencies to join the cause. Elsewhere, vehicles that individuals and families use to shelter income and assets from tax, like trusts, corporations and foundations, are being examined more closely and critically. In certain cases, laws are amended to neutralize the effectiveness of tax-avoidance methods soon after they are devised. Also, foreign visitors’ claims of nonresidence for tax purposes are being treated more skeptically. “We’ve seen a huge amount of tax scrutiny,” said Mr. Cornelius at Ernst & Young. “Authorities are more aggressive in pursuing individuals. There’s more sharing of information across borders. That’s going to continue.”

To be fair to the author, I don’t detect ideological bias in the story. He inadvertently provides evidence confirming that tax competition is needed to restrain greedy politicians, so he scores a goal against the statists. But, unlike our President and some others who are even more radical, I don’t think he was trying to advance the left-wing narrative that tax competition is bad and that tax havens are evil.

So perhaps he’s only guilty of the “Butterfield Effect” and not the “Own-Goal Effect.”

But he does work at the New York Times, which is tediously left wing (see here, here, here, here, here, here, and here), so we’ll give the newspaper an award for the “Own-Goal Effect.”

The following article struck me as the perfect example of why to not look for or accept the handouts of liberal states like Connecticut. Not only are they dishonest and don’t work; they also will not be there when needed the most.

Thank you for the great work being done by CATO and International Liberty, keep it up.

By how much is Connecticut in the red? $60 million? $200 million? $400 million?

I can’t keep track anymore. Whatever the final number, when the legislature convenes just days before Christmas to address it, its members are sure to come down hard on Connecticut’s social service agencies, as Arielle Levin-Becker and Keith Phaneuf have reported. The poor, elderly and disabled may be the worst hit.

That won’t be an easy pill to swallow for the poor, elderly, and disabled of Connecticut — many of whom are still struggling to recover from Superstorm Sandy, as I reported this week.

A fascinating essay in this week’s New York Times explains how so much of New York City’s public housing ended up on the waterfront — and therefore, is in ruins after Superstorm Sandy ripped through the region.

That question could be explored regarding Connecticut’s shoreline as well — in cities like Bridgeport, where hundreds of families in public and low-income housing complexes suffered flooding damage two years in a row — first from Irene last year, and now from Sandy. If the storm had been just a little worse, thousands more could have been displaced — and the city would have had nowhere to put them.

And yet there’s no money to relocate these buildings, or even take any major precautions like removing boilers from basements. (That would mean losing precious first-floor units, and there aren’t a whole lot of vacancies in public housing.) These damaged complexes — and places that just barely escaped damage this time around — will be rebuilt with minimal extra protections against future flooding. In Norwalk, a proposal to raze and rebuild waterfront public housing on higher ground is contingent on the award of tens of millions of dollars to the city from the federal government.

Many of the families living in this housing are single mothers with three or more kids. They’ve lost at least a week’s worth of food in their fridges from extended power outages; a week’s worth of wages, for some; and for those with first-floor apartments that were flooded, all or many of their belongings. But once their buildings are renovated, most will move back — because they’ve got nowhere else to go.

Let’s hope that they aren’t flooded come the next storm — and that these latest budget cuts don’t do them equal harm.

[…] a destination-based tax system because they don’t like tax competition. They understand that tax competition restrains the ability of governments to over-tax and over-spend. Governments in Europe chose destination-based value-added taxes to prevent consumers from being […]